Glen
Senior Member
Where did you get the figures from that supports the notion that current DC's are sufficient to cover costs?
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Tridel asks for stay of Toronto development charge increases
- Thread starter interchange42
- Start date
Where did you get the figures from that supports the notion that current DC's are sufficient to cover costs?
MuchoGrande
New Member
Good question Glen. I don't have any evidence and I couldn't argue that current DCs cover precisely 100% of new development's share of costs. However, the 2004 DC by-law should have addressed this and if it didn't I haven't heard anyone show that it didn't.
Some on council have argued that "development doesn't pay for itself" but I am not sure that anyone has actually studied it. This would be a seriously massive undertaking but may help end the debate once and for all!
It seems that part of the problem is that the budget figures are getting manipulated in the DC background studies to exaggerate the true costs related to development. Predictably, the development industry gets fired up and the only solution ends being a negotiated settlement that's not really rooted in accurate figures. In his article, John Barber focused on one developer and not on the trade unions, the academics from the three local universities and the affordable housing advocates that have taken issue with the City's approach.
In their background study, the City looked at capital and operating requirements going forward but I am not sure that it ever looked at the benefits of development on its finances (eg increased assessment, land transfer tax and development charges) versus the costs (increased capital and services related to those units). This is to say nothing of the benefits of intensification and providing new housing units.
If there is a downturn in the market, the City has to prepare for decreased revenue from DCs, LTT and assessment from new units. If "development doesn't pay for itself" than perhaps the City's finances would be better off if the condo market does tank...
The background study (all 366 pages) showing the allocation of costs is found at:
http://www.toronto.ca/legdocs/mmis/2008/ex/bgrd/backgroundfile-16718.pdf
Some on council have argued that "development doesn't pay for itself" but I am not sure that anyone has actually studied it. This would be a seriously massive undertaking but may help end the debate once and for all!
It seems that part of the problem is that the budget figures are getting manipulated in the DC background studies to exaggerate the true costs related to development. Predictably, the development industry gets fired up and the only solution ends being a negotiated settlement that's not really rooted in accurate figures. In his article, John Barber focused on one developer and not on the trade unions, the academics from the three local universities and the affordable housing advocates that have taken issue with the City's approach.
In their background study, the City looked at capital and operating requirements going forward but I am not sure that it ever looked at the benefits of development on its finances (eg increased assessment, land transfer tax and development charges) versus the costs (increased capital and services related to those units). This is to say nothing of the benefits of intensification and providing new housing units.
If there is a downturn in the market, the City has to prepare for decreased revenue from DCs, LTT and assessment from new units. If "development doesn't pay for itself" than perhaps the City's finances would be better off if the condo market does tank...
The background study (all 366 pages) showing the allocation of costs is found at:
http://www.toronto.ca/legdocs/mmis/2008/ex/bgrd/backgroundfile-16718.pdf
Glen
Senior Member
Thanks for the link.
I will take a thorough look later. A quick glance show that the shortfall is large indeed.
Mike in TO
Senior Member
What can and cannot be charged is articulated very clearly in the Development Charges Act - it's not up to politicians or the media to cook up figures of where the fees should be. Toronto's DC's are lower then the 905 since there is far less direct growth related expenditures in intensification projects vs greenfield development - which is the entire purpose of smart growth / intensification - to reduce the burden on infrastructure. The legislation doesn't permit Toronto (or any mature city) to charge as much as greenfields (fees for single familiy homes top $40,000 in some municipalities) as the infrastructure burden is far higher in greenfields. Furthermore all on site direct costs are paid by the developer through connection charges/fees etc that are not included in DCs, plus there is a host of other municipal taxes, charges and fees on new development.
The city is looking at DCs and the development industry as a cash cow, however its been proven by the 905 experience that excessive reliance on revenue from DC is unsustainable, leads to affordability problems, and can be used to artificially keep property taxes lower then they should be to cover municipal services etc - all you have to do is look at Mississauga which survived on DCs until recently when the city was essentially built out - and now they've had to turn back to property taxes with some significant increases since the development money isn't pouring in any more.
This "freeze" is very temporary, the city will try to ram through an over 100% increase in DCs phased in over a couple years following the freeze. Also DCs in Toronto have increased by over 333% since 2001 in Toronto - which is a ridiculous escalation (This compares to an average DC increase of 75.1% in the rest of the GTA over that time period).
The city is looking at DCs and the development industry as a cash cow, however its been proven by the 905 experience that excessive reliance on revenue from DC is unsustainable, leads to affordability problems, and can be used to artificially keep property taxes lower then they should be to cover municipal services etc - all you have to do is look at Mississauga which survived on DCs until recently when the city was essentially built out - and now they've had to turn back to property taxes with some significant increases since the development money isn't pouring in any more.
This "freeze" is very temporary, the city will try to ram through an over 100% increase in DCs phased in over a couple years following the freeze. Also DCs in Toronto have increased by over 333% since 2001 in Toronto - which is a ridiculous escalation (This compares to an average DC increase of 75.1% in the rest of the GTA over that time period).
Glen
Senior Member
I believe that that is what the background report does. It expenses the actual cost for the necessary increase in services, such as police, fire ambulance, etc. It concludes that current expenses are not covered by current DC's. That does not invalidate the points that you made, namely benefits from higher utilization in denser areas. Yet a shortfall remains.
Mike in TO
Senior Member
The question is how acurate is the background report? The eventual result will likely be a compromise between the city and development industry based on interpretations and the acuracy of findings within the background study.
The other issue is timing... given what sales levels have been reported the last couple of months this would be the worst timing to require massive fee increases.
taal
Senior Member
Well they said it's on hold for now...
Glen
Senior Member
Hopefully, seeing that the report was done by a third party, it is reasonably accurate. Calculating some costs per capita is not to difficult and offer a fair approximation. I would certainly believe that the estimates in the report are a closer approximation of true costs than the current fees are.